The Insurance Ombudsman mechanism under the Insurance Ombudsman Rules, 2017 was created to provide a fast, cost - free, and impartial forum for individual policyholders with claims up to ₹50 Lakhs. Yet insurers often attempt to delay or challenge Ombudsman awards without valid jurisdictional grounds.
Why This Judgment Matters
- Asymmetric Binding Nature: An Ombudsman award is optional for the policyholder to accept, but strictly binding on the insurance company.
- 30 - Day Compliance Window: Once the award is passed, the insurer must comply within 30 days and intimate compliance to the Ombudsman.
- Penal Interest for Delays: Delayed compliance entitles the policyholder to penal interest at 2% above the prevailing bank rate under IRDAI (Protection of Policyholders' Interests) Regulations.